Supreme Court takes firm stand on spousal support payments

kirk makin

From Thursday's Globe and Mail

Estranged spouses who agree on spousal support payments will have great difficulty changing them in future, the Supreme Court of Canada has ruled.

Underlining its preference for certainty and predictability in two closely watched appeals, the court refused to let two spouses argue their way out of agreements negotiated and enshrined in formal court orders several years earlier.

With a divorce rate that hovers over 40 per cent, the court’s firm approach to varying spousal support agreements promises to have widespread effects.

Wednesday’s judgments revolved around the need for a former spouse to show that there has been “a material change in circumstances” that would justify changing – or varying – the original order.

“Variations are approximately 25 per cent of all family litigation,” said Phil Epstein, a prominent Toronto family lawyer. “They are extremely common and much court time is taken up over whether there has or has not been a change of circumstances and, if so, what the new result should be.”

Mr. Epstein said the decisions accentuate the importance of divorcing couples crafting agreements that are meant to stand the test of time.

“At stressful times following separation, couples sign agreements to end the dispute,” Mr. Epstein said. “But they need to pause and remember that these agreements may bind them for a lifetime. Long-term agreements therefore need change mechanisms that can be utilized to make sure they remain fair.”

Dalhousie University law professor Rollie Thompson noted that the decisions embody a careful approach to material change and should not cause any alarm. “You should always be careful in signing an agreement including spousal support, but no more careful after these decisions than before,” he said.

The couple in the first case were married in 1988. Shortly afterward, the wife was diagnosed with multiple sclerosis and has never worked outside the home since then.

When they separated in 2002, the couple reached a comprehensive agreement that gave the wife indexed spousal support of $3,688 a month. However, in 2007, the husband sought a reduction and eventual cancellation of his spousal support obligation on the grounds that he was no longer making as much money and that his ex-wife ought to have sought employment.

A trial judge concluded that the wife was indeed able to work outside the home. He ordered a reduction of support leading to its termination in August, 2010. The ruling was affirmed by the Quebec Court of Appeal, which concluded that the wife’s failure to become self-sufficient amounted to a material change in circumstances.

In restoring the terms of the couple’s original agreement, the Supreme Court faulted the reasoning of the lower court judges.

“Not only was the husband fully aware of her medical condition, he made representations, before and after the separation, to her disability insurer, to pension personnel and to tax authorities that she was unable to work,” Madam Justice Rosalie Abella and Mr. Justice Marshall Rothstein said.

“His changed position at trial – that she can now work – is both unpalatable and unworthy of serious consideration,” they concluded.

In the second case, a couple had married in 1958, separated in 1974 and divorced in 1984. The husband agreed to pay $1,950 in spousal and child support each month. In 2008, the husband – who had since retired – applied to terminate his spousal support obligation based on a stock-market downturn that had caused him serious losses.

The Quebec Court of Appeal ordered that his payments be gradually reduced and finally terminated in September, 2010. However, the Supreme Court said the husband had not even revealed his actual losses, meaning the lower courts shouldn’t have bothered inquiring into whether there had been a material change in circumstances.

Mr. Epstein said that both cases demonstrate the need for separating spouses to obtain experienced legal advice and strong factual evidence.

“Had the parties agreed that there would be a review of support in the event of retirement or significant changes in market conditions or economic circumstances, the result might well have been different.”